A recent analysis by finance expert RIFT suggests that a crackdown on improper Jobseeker’s Allowance (JSA) claims, proposed by Chancellor Rishi Sunak, could lead to a substantial increase in tax revenue for the British economy.
Jobseeker’s Allowance, a benefit for individuals actively seeking work and working less than 16 hours per week, is undergoing a transition to Universal Credit. Currently, those aged 24 and under can claim up to £71.70 per week, while those 25 and over can claim up to £90.50.
Statistics reveal that 87,631 individuals across Britain are currently claiming JSA, although this figure has seen a decrease of -1.6% year on year. Regions like London (16.6%), the West Midlands (12.1%), and the South East (11.6%) have the highest concentration of JSA claimants. However, the South West has witnessed a notable annual increase of 22.7% in claimants.
Recent reports from the National Audit Office indicate that a quarter of JSA claimants have been involved in abusing the system. In response, Prime Minister Boris Johnson has announced a series of welfare reforms, including the removal of JSA benefits for those who refuse job offers after 12 months.
RIFT’s analysis suggests that encouraging more JSA claimants to transition into employment could significantly benefit the British economy. Based on the current minimum wage of £11.44 per hour for individuals over 21, and assuming an average working week of 40 hours, transitioning claimants could earn a gross average income of £23,795 annually.
This transition to employment would result in an estimated annual tax contribution of £3,143 per individual, comprising £2,245 in income tax and £898 in National Insurance. If just 25% of the current JSA claimants make this tax contribution annually, it could inject £68.9 million into the British economy, with London alone contributing £11.4 million.
Bradley Post, Managing Director of RIFT, emphasized the role of Britain’s benefit system in supporting those in need while acknowledging the necessity of cracking down on system abuse. He noted the potential economic benefits of transitioning JSA claimants into employment, albeit recognizing the challenges many face in making this transition.
The proposed reforms aim to strike a balance between supporting individuals in need and ensuring the integrity of the welfare system, with a view towards bolstering the British economy in the process.
